Fugitive Boy Band Manager Busted

06/14/2007 10:28 AM, E! Online


The man who foisted the Backstreet Boys and 'N Sync on the world is kissing his freedom bye bye bye.

Boy-band impresario Lou Pearlman was nabbed Thursday in Indonesia by U.S. authorities for his involvement in an alleged multimillion-dollar scam.

The 53-year-old, who was collared at a hotel, was expelled from country and transported to the U.S. territory of Guam, where he was due to appear in court before being flown to Florida to face one felony count of bank fraud, according to Steve Cole, a spokesman for the U.S. Attorney's Office in Tampa.

"The arrest happened within the last 24 hours. Indonesian police and the FBI arrested him. Indonesian authorities didn't want him so they let the FBI take him to Guam where he's having his initial appearance," Cole told E! Online. "We would obviously argue for detainment and return to the middle district of Florida for him to face the felony bank fraud charge."

Pearlman is the object of several federal and state criminal probes and a flurry of lawsuits accusing him of setting up a phony accounting firm that prepared false securities statements to cheat more than 1,800 investors out of a $317 million and bilked banks out of more than $130 million.

Facing subpoenas from the government and various plaintiffs, Pearlman left the country in January to escort his latest boy band creation, US5, on a trek to Europe, and then disappeared. Law enforcement officials received reports of Pearlman in Israel, Russia, Panama and Brazil. They eventually found him holed up in the tourist haven of Nusa Dua in Bali after he apparently mailed a letter to his Orlando attorney with a return address in Indonesia.

News of his arrest comes just two days after involuntary bankruptcy proceedings were held in Orlando and many of Pearlman's assets were auctioned off to pay creditors. A warehouse full of prized music memorabilia was liquidated, including Backstreet and 'N Sync gold and platinum records, a key to the city, artwork, computers, high-end furniture, trucks and vans, two Waverunners and a power boat.

FBI and IRS agents obtained search warrants and raided his downtown offices earlier this year, confiscating caseloads documents, which led to the bank fraud charge.

Pearlman was subsequently slapped with civil suits in both state and federal court from investors. They claimed to have contributed funds to a fake high-interest employee savings account that turned out to be a Ponzi scheme, with Pearlman and his various companies allegedly pocketing the money.

Investigators have turned up little money from Pearlman's known savings accounts, dismaying many of Pearlman's purported victims.

"I hope that he does time. He stole money from innocent people who trusted him and put all their life savings into an investment we thought was secure," Joe Madigan, who reportedly lost $300,000 in the scam, told the Orlando Sentinel.

An attorney for Pearlman could not be reached for comment.

At the height of his music career in the 1990s, Pearlman's Trans Continental Records stable included the Backstreet Boys, 'N Sync, Aaron Carter, Jordan Knight and O-Town. But his top acts eventually rebelled, with Backstreet, 'N Sync and Carter all suing to break their contracts, allegeding financial hanky-panky.